Handbook of Business Procedures

7.2. AUTHORITY TO OBLIGATE

A. Introduction

Authority to obligate institutional funds of The University of Texas at Austin for purchases of supplies, materials, services, and equipment is granted to the Purchasing Office by the president pursuant to authority granted in accordance with The University of Texas System Rules and Regulations of the Board of Regents, Rule 10501: Delegation to Act on Behalf of the Board. The UT System Administration Policy Library – Policy UTS159: Purchasing authorizes the primary procurement officer to publish procedures to facilitate and expedite the purchasing function.

B. Delegated Purchasing Authority

To expedite purchasing functions, university business officers are authorized by the university to approve small purchase orders up to $15,000. With this authorization comes the responsibility of business officers to comply with UT System’s Ethics, all established purchasing policies of The University of Texas at Austin, established purchasing program procedures, and any other requirements as determined by the primary procurement officer. Procedural and policy violations may result in removal of privileges at the discretion of the university’s vice president and chief financial officer.

The following rules govern university purchases:

• Staff members of the Purchasing Office cannot release a purchase order to a supplier either verbally or in writing that exceeds his or her release authority until the order is reviewed and approved by personnel who have authority at that level of commitment.
• Purchase orders must be issued prior to the shipment of a product or the delivery of a service. Suppliers are not authorized to commence work prior to the receipt of an authorized purchase order. Invoices for goods or services provided without an authorized purchase order require management review and approval prior to payment. The university is not obligated to pay invoices for goods and services that have not been properly authorized.
• The Purchasing Office is responsible for approving any purchase requests that exceed $15,000.

C. Authorized Purchasing Methods

Purchase of goods and services requires the issuance of a purchase order, the issuance of a contract, or the use of a procurement card (Procard). Purchases for the university made by faculty, staff, and students using personal funds are not authorized and will only be reimbursed as an exception. For information about the following topics, see the appropriate section of the Handbook of Business Procedures:

• Purchase order procedures: 7.4. Purchasing Process
• Contract procedures: 7.5.2. Use of Existing Contracts
• Procard procedures: 7.8. Procurement Card Program
• Purchase of goods and services that are exempt from use of purchase order, contract, or Procard: 7.7.7. Purchases That Do Not Require a Purchase Order

D. Noncompliant Purchases

A noncompliant purchase occurs when a University employee places an order without first having a properly approved purchase order or contract and an invoice is received in an attempt to pay the vendor.

• Such purchases can create significant problems for the University including:
• Resulting in duplicate payments to the vendor that the department would be responsible for.
• Resulting in higher costs for goods and services than might have been paid through standard purchasing methods or by utilizing contracted vendors.
• Resulting in supplier contracts with unfavorable terms and conditions agreed to by University personnel that are not authorized agents for the University.
• Leading to vendor payment delays can result in problems for other departments on campus.
• Violating the University’s purchasing policies.
• Bypassing the University’s encumbrance requirements.
• Placing the University at risk financially.
• Creating additional, often unnecessary, work for administrative support staff.

If you have a noncompliant purchase, and require an after-the-fact (ATF) purchase order, the following rules must be adhered to: 

• The Department must complete and submit the approved Noncompliant Purchase form along with a requisition using POINT Plus.
• Be sure to follow all instructions noted on the form to prevent a processing delay.
• Noncompliant purchases leading to after-the-fact requisitions may incur late interest payments via the Texas Prompt Payment Act.  This accrued late interest is automatically charged to the account number listed on the purchase order when payment is processed, unless it is a sponsored account number then accrued late interest is automatically charged to a central account number when payment is processed. 
• Noncompliant purchases will be reported quarterly to university administration (CSU Business Officers, Provost Office, Chief Financial Officer, and Internal Audit).

1. Processing of Noncompliant Purchase Form

If a department has an invoice that did not follow the required procurement process, the Noncompliant Purchase Form shall be completed. 

The requesting department shall complete and submit the Noncompliant Purchase Form to their CSU Business Officer or designee (CUBO member) for review and approval.

The Noncompliant Purchase Form has been created to address the following requirements:

• Documentation of the reason for the noncompliant purchase.
• Name and title of the individual responsible for the purchase.
• Amount of purchase.
• Signed statement declaring that the individual responsible has been informed of the proper purchasing procedure.
• Agreement that future purchases will be made in accordance with purchasing procedures.  

2. Approval of Noncompliant Purchase Form 

The CSU Business Officer or designee may approve requests up to the small purchase limit of $15,000. 

Requests greater than $15,000 shall be routed to the Central Procurement Office for approval. 

If the noncompliant purchase is approved, the requesting department shall complete an after-the-fact purchase order. 

If the noncompliant purchase is not approved, the individual responsible for ordering the goods or services and incurring the unauthorized obligation must either:

a. return the purchased goods to the supplier, explaining that the University is under no obligation to pay for them; or 

b. pay for the purchase using personal funds and without any reimbursement from the University.

3. Processing the After-the-Fact (ATF) Purchase Order

Requests $15,000 or less

The requesting department shall complete a PBO purchase order in POINT Plus. The PBO local file must include the approved Noncompliant Purchase form and the approved invoice.

The department shall select “After-the-Fact PO” as the “Solicitation Method” within the “Awarded Vendor” screen of the PO in POINT Plus. 

The PBO shall include the following statement in the description under line 1 of the purchase order to ensure supplier understands the request is for payment purposes only as an after-the-fact purchase.

This after-the-fact purchase order is for payment purposes only. Supplier is placed on notice that any future work that is performed without a properly approved University purchase order or contract shall be at the sole risk and expense of the supplier. Note: invoice attached – DO NOT DUPLICATE ORDER.    

Requests greater than $15,000

The requesting department shall complete a PB4 purchase order in POINT Plus. The approved Noncompliant Purchase Form, and a copy of the approved invoice shall be submitted to the Central Procurement Office at purchasing@austin.utexas.edu for final approval. 

The Central Procurement Office shall select “After-the-Fact PO” as the “Solicitation Method” within the “Awarded Vendor” screen of the PO in POINT Plus. 

The PB4 shall include the following statement in the description under line 1 of the purchase order to ensure supplier understands the request is for payment purposes only as an after-the-fact purchase.

This after-the-fact purchase order is for payment purposes only. Supplier is placed on notice that any future work that is performed without a properly approved University purchase order or contract shall be at the sole risk and expense of the supplier. Note: invoice attached – DO NOT DUPLICATE ORDER.    

4. Processing Payment

Requests $15,000 or less

Requesting departments shall be responsible for including the approved form as part of the PBO (local files) and the VP1 payment document.  

Requests greater than $15,000

Requesting departments shall be responsible for including the approved form as part of the PB4 (local files) and the VP1 payment document.   

Note: Future or repeated noncompliant purchase requests may be refused.

E. Authority to Sign Contracts

The president of the university has delegated contract signing authority to the Business Contracts Office within the Office of the Vice President and Chief Financial Officer. For information regarding contracts and additional delegation of authority related to contracts, contact Business Contracts.

F. Authority to Sign Software License Agreements

The president of the university has delegated authority to sign software license agreements to the Business Contracts Office. Software licenses and subsequent renewals should be placed on purchase orders. Terms and conditions of software license agreements are reviewed, negotiated, and approved by the Business Contracts Office.

G. Authority to Sign Equipment Maintenance Agreements

Equipment maintenance agreements are typically a part of the equipment purchase. The Purchasing Office is authorized to sign equipment maintenance agreements and renewals. Purchasing staff members are authorized to sign up to the dollar amount of their individual levels of authorization.

Part 7. Purchasing - Table of Contents